Whistle-blowing is commonly defined as “the disclosure by organization members (former or current) of illegal, immoral or illegitimate practices under the control of their employers, to persons or organizations that may be able to effect action” (Near & Miceli, 1985)[1]. In layman’s terms, a whistle-blower is someone who reports corrupt/unethical organizational practices, such as bribery to either officials or to someone in a powerful position within the organization. The term “whistle-blowing” refers to sports, such as hockey or football, where the referee blows a whistle to pause the game when someone acts against the rules.
Benefits and Risks
Most whistle-blowers try to act within the organization before reporting questionable practices to officials, in order to enable correction of the behavior without public attention.[2] When whistle-blowers are listened to internally, it may save a company’s public image as well as save the company from significant fines and other consequences.[3] However, whistle-blowers sometimes face difficulty in trying to get their message across to either persons in power within the organization or to external officials because their role in the company is not significant enough.[4]
While whistle-blowing is publicly praised, the risks of acting as a whistleblower are extremely high for individuals. Whistle-blowers are usually punished by their employers for having betrayed the company, and thus it can be harmful to one’s career.[5] Studies have also shown, that employees are more likely and willing to act as whistle-blowers when corrupt practices are not deeply embedded in the organization, and therefore the behavior is easier to terminate.[6] This usually means that corruption has only occurred for a short period of time or the impacts are relatively minor.[7] It has been shown that employees are more likely to report wrong-doing, if the organization has clear instructions of what constitutes as wrong, how to report it, and how whistle-blowers will be treated.[8] (See Codes of conduct)
Whistle-blowing in Finland
Finland has continuously ranked at the top of Transparency International’s Corruption Perception Index,[9] and Finns commonly take pride in being honest by nature.[10] Consequently, Finnish legislation concerning corruption is limited, and corruption lawsuits are rare.[11] Whistleblowing is neither recognized in Finnish legislation[12] nor is there a Finnish translation for the term. The UNCAC, the OECD, TI and GRECO have all noted that Finland should update its legislation and create more efficient and safer channels for whistle-blowing in public offices.[13] However, 90% of the 20 biggest Finnish companies implement a code of conduct, with recommendations for the procedure and some even facilitate anonymous whistle-blowing.[14] So far, only one academic research has been conducted covering whistle-blowing in Finland.[14]
Legislation to encourage whistle-blowing
United States of America
The United States False Claims Act allows private persons not representing the government to file a lawsuit against companies that they believe are defrauding the government.[15] The law not only enables whistle-blowing it also offers potentially significant rewards (a percentage of the damages) the whistle-blower thus giving an incentive to report corrupt behavior within companies.[16]
United Kingdom
In the United Kingdom, the Public Interest Disclosure Act of 1998 offers protection to whistle-blowers so that they may not be punished in any way, including termination of employment, for having reported fraudulent behavior to officials.[17] Unlike the False Claims Act in the U.S.A, the British law does not promise rewards to whistle-blowers.
Finland
Finland has no legislation specifically concerning whistle-blowing, or the protection of whistle-blowers; however, there are separate laws on public officials’ duty to report unlawful practices and on wrongful termination of employment.[18]
Famous whistle-blowers
W. Mark Felt
The former 2nd Associate Director of the FBI finally admitted in 2005 that he was the one to leak information concerning the Watergate cover-up to the media. The infamous Watergate scandal eventually lead to the resignation of President Nixon, and even 40 years later it is still frequently mentioned in the context of unethical practices.[19]
Sherron Watkins
Vice President of Corporate Development at Enron, Sherron Watkins is an example of internal whistle-blowing. Prior to Enron’s bankruptcy in 2001 and eventual trial concerning accounting fraud, she approached Kenneth Lay, then CEO of the company, and expressed her concerns that there were irregularities in the company’s financial reports. Lay promised to investigate, but eventually nothing happened, and thus Watkins has been criticized for not going to government officials with the information. [20]
Edward Snowden
In 2013 former CIA and NSA employee leaked information to the media concerning NSA’s surveillance of private citizens as well as foreign government officials all over the world. The revelations raised concerns about internet and phone security, especially for those in high government positions. Because Snowden leaked confidential government documents, his actions are not protected by the False Claims Act[21], and he has spent the last year moving from one country to another seeking asylum.[22]
Cheryl Eckard
In 2002, then quality manager at GlaxoSmithKline, Cheryl Eckard found severe quality discrepancies at one of the company’s manufacturing plants in Puerto Rico. After repeated reports to the headquarters demanding changes, Eckard was fired, and her reports ignored. She proceeded to file a law-suit against GlaxoSmithKline, which resulted in a prolonged battle in court, and eventually $750 million payments for the company, with a $96 million reward for Ms. Eckard herself.[23]
Definition
Table of Contents
Benefits and Risks
Most whistle-blowers try to act within the organization before reporting questionable practices to officials, in order to enable correction of the behavior without public attention.[2] When whistle-blowers are listened to internally, it may save a company’s public image as well as save the company from significant fines and other consequences.[3] However, whistle-blowers sometimes face difficulty in trying to get their message across to either persons in power within the organization or to external officials because their role in the company is not significant enough.[4]
While whistle-blowing is publicly praised, the risks of acting as a whistleblower are extremely high for individuals. Whistle-blowers are usually punished by their employers for having betrayed the company, and thus it can be harmful to one’s career.[5] Studies have also shown, that employees are more likely and willing to act as whistle-blowers when corrupt practices are not deeply embedded in the organization, and therefore the behavior is easier to terminate.[6] This usually means that corruption has only occurred for a short period of time or the impacts are relatively minor.[7] It has been shown that employees are more likely to report wrong-doing, if the organization has clear instructions of what constitutes as wrong, how to report it, and how whistle-blowers will be treated.[8] (See Codes of conduct)
Whistle-blowing in Finland
Finland has continuously ranked at the top of Transparency International’s Corruption Perception Index,[9] and Finns commonly take pride in being honest by nature.[10] Consequently, Finnish legislation concerning corruption is limited, and corruption lawsuits are rare.[11] Whistleblowing is neither recognized in Finnish legislation[12] nor is there a Finnish translation for the term. The UNCAC, the OECD, TI and GRECO have all noted that Finland should update its legislation and create more efficient and safer channels for whistle-blowing in public offices.[13] However, 90% of the 20 biggest Finnish companies implement a code of conduct, with recommendations for the procedure and some even facilitate anonymous whistle-blowing.[14] So far, only one academic research has been conducted covering whistle-blowing in Finland.[14]
Legislation to encourage whistle-blowing
United States of America
The United States False Claims Act allows private persons not representing the government to file a lawsuit against companies that they believe are defrauding the government.[15] The law not only enables whistle-blowing it also offers potentially significant rewards (a percentage of the damages) the whistle-blower thus giving an incentive to report corrupt behavior within companies.[16]United Kingdom
In the United Kingdom, the Public Interest Disclosure Act of 1998 offers protection to whistle-blowers so that they may not be punished in any way, including termination of employment, for having reported fraudulent behavior to officials.[17] Unlike the False Claims Act in the U.S.A, the British law does not promise rewards to whistle-blowers.Finland
Finland has no legislation specifically concerning whistle-blowing, or the protection of whistle-blowers; however, there are separate laws on public officials’ duty to report unlawful practices and on wrongful termination of employment.[18]Famous whistle-blowers
W. Mark Felt
The former 2nd Associate Director of the FBI finally admitted in 2005 that he was the one to leak information concerning the Watergate cover-up to the media. The infamous Watergate scandal eventually lead to the resignation of President Nixon, and even 40 years later it is still frequently mentioned in the context of unethical practices.[19]Sherron Watkins
Vice President of Corporate Development at Enron, Sherron Watkins is an example of internal whistle-blowing. Prior to Enron’s bankruptcy in 2001 and eventual trial concerning accounting fraud, she approached Kenneth Lay, then CEO of the company, and expressed her concerns that there were irregularities in the company’s financial reports. Lay promised to investigate, but eventually nothing happened, and thus Watkins has been criticized for not going to government officials with the information. [20]Edward Snowden
In 2013 former CIA and NSA employee leaked information to the media concerning NSA’s surveillance of private citizens as well as foreign government officials all over the world. The revelations raised concerns about internet and phone security, especially for those in high government positions. Because Snowden leaked confidential government documents, his actions are not protected by the False Claims Act[21], and he has spent the last year moving from one country to another seeking asylum.[22]Cheryl Eckard
In 2002, then quality manager at GlaxoSmithKline, Cheryl Eckard found severe quality discrepancies at one of the company’s manufacturing plants in Puerto Rico. After repeated reports to the headquarters demanding changes, Eckard was fired, and her reports ignored. She proceeded to file a law-suit against GlaxoSmithKline, which resulted in a prolonged battle in court, and eventually $750 million payments for the company, with a $96 million reward for Ms. Eckard herself.[23][1]Near, J. P. & Miceli, M. P. (1985). Organizational dissidence: The Case of Whistle-blowing. Journal of Business Ethics, 1985, volume 4, 1-16
[2]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[3]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[4]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[5]Miceli, M. P., & Near, J. P. (1992). Blowing the whistle: The organizational and legal implications for
companies and employees. New York: Lexington Books.
[6]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[7]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[8]Miceli, M. P., & Near, J. P. (2002). What makes whistle-blowers effective? Three field studies. Human
Relations, 55, 455–479.
[9] http://www.transparency.org/cpi2012/results
[10] http://www.hs.fi/talous/a1405998082878 Helsingin Sanomat 22.7.2014
[11] https://www.poliisi.fi/poliisi/krp/home.nsf/pages/0A2FDA8FDBE427C1C2257988003B36C7?opendocument
[12] http://www.legislation.gov.uk/ukpga/1998/23/contents
[13] http://ec.europa.eu/dgs/home-affairs/what-we-do/policies/organized-crime-and-human-trafficking/corruption/anti-corruption-report/docs/2014_acr_finland_chapter_en.pdf[14] Lahtinen, Kati (2013) Whistle-blowing schemes in 20 biggest Finnish companies – Master’s Thesis in International Business. Aalto University School of Business 2013.
[14] Lahtinen, Kati (2013) Whistle-blowing schemes in 20 biggest Finnish companies – Master’s Thesis in International Business. Aalto University School of Business 2013.
[15] http://www.law.cornell.edu/uscode/text/31/3729
[16] Yang, C. & France, M. (1997) Whistle-blowers on Trial – Corporate America takes its case to the Supreme Court. Business Week. 24.3.1997, Issue 3519, p. 172-178
[17]http://www.legislation.gov.uk/ukpga/1998/23/contents
[18] https://blueprintforfreespeech.net/document/finland
[19] http://www.washingtonpost.com/politics/fbis-no-2-was-deep-throat-mark-felt-ends-30-year-mystery-of-the-posts-watergate-source/2012/06/04/gJQAwseRIV_story.html
[20] http://www.forbes.com/2002/02/14/0214watkins.html
[21] http://www.law.cornell.edu/uscode/text/31/3729
[22] http://www.theguardian.com/commentisfree/2014/jun/05/what-snowden-revealed-changed-nsa-reform
[23] http://online.wsj.com/articles/SB10001424052702303443904575578713255698500
criticized